The Corona pandemic last year left millions of people without work and triggered the worst economic contraction since the Great Depression. Yet the proportion of people living in poverty in the United States actually declined due to the government’s enormous relief efforts.
About 9.1 percent of Americans were poor last year, the Census Bureau reported Tuesday, down from 11.8 percent in 2019. It is based on a measure that accounts for the impact of public assistance programs, which last year lifted millions of people out of poverty. The government’s official poverty target, which excludes some major development assistance programs, rose to 11.4 percent from a record low of 10.5 percent in 2019.
The fact that poverty did not increase more during such an enormous economic disruption reflects the reaction of the equally enormous government. Congress expanded unemployment benefits and food aid, distributed hundreds of billions of dollars to small businesses, and sent direct checks to most U.S. households. The Census Bureau estimated that direct control alone lifted 11.7 million people out of poverty last year, and that unemployment benefits prevented 5.5 million people from falling into poverty.
“It all points to the historical income support provided in response to the pandemic and how successful it was to dull what could have been a historic increase in poverty,” said Christopher Wimer, co-director of the Center for Poverty and Social Policy. Columbia University School of Social Work. “I imagine the momentum from 2020 will continue into 2021.”
Poverty rose much more drastically after the last recession, peaking at 15.1 percent in 2010 and improving only slowly after that.
Still, public assistance programs excluded some groups, e.g. Undocumented immigrants and their families, and failed to reach others. Poverty, with or without government support taken into account, was significantly higher than the overall average for blacks and Hispanics, foreign-born residents, and those without a college education. Millions of people endured delays for weeks or months before receiving benefits, forcing many to seek help from food banks or other charities.
“We measure poverty annually when the reality of poverty is facing day by day,” said Hilary Hoynes, an economist at the University of California, Berkeley, who has studied the government’s response to the pandemic.
The median household income last year fell 2.9 percent, adjusted for inflation, to around $ 68,000, a figure that includes unemployment benefits but not stimulus checks or noncash benefits such as food stamps. The decline reflects the huge job losses caused by the pandemic: About three million fewer people worked at all in 2020 than in 2019, and 13.7 million fewer people worked full time all year round. Among those who kept their jobs, however, 2020 was a good year economically: Median earnings for full-time workers year-round rose 6.9 percent, adjusted for inflation.
Many of the programs that helped people avert poverty last year have expired, though the pandemic continues. An estimated 7.5 million people lost unemployment benefits this month after Congress allowed expansions of the pandemic program to lapse.
The new data could contribute to efforts by President Biden and congressional leaders to implement a more lasting expansion of the safety net. The Democrats’ $ 3.5 trillion plan, which is still taking shape, could include paid family and medical leave, state-subsidized child care and a permanent extension of the child tax credit. Liberals said the success of relief programs last year showed that such policies should be continued and expanded.
“The key is that we are seeing the extremely strong poverty reduction and pro-middle-income effects of the government’s response,” said Jared Bernstein, a member of the White House Council of Economic Advisers. He argued that the success should encourage lawmakers to adopt Mr Biden’s long-term economic agenda.
“It’s one thing to temporarily lift people out of poverty – hugely important – but you can not stop there,” Bernstein said. “We need to make sure that people do not fall back into poverty after these temporary measures subside.”
But many conservatives argue that while some expansion of state aid was appropriate during the pandemic, these programs should be shut down when the economy recovers.
“Politicians did a remarkable job in March last year by passing CARES and other legislation, lending to companies, providing loan chairmanship, expanding the safety net,” said Scott Winship, a senior fellow and director of poverty studies at the American Enterprise Institute, a conservative group, wrote in response to the data, citing an early bill for pandemic assistance, which included $ 2 trillion in spending. “But we should then have turned to other priorities.”